By Tony Munroe
BEIJING (Reuters) – China is sticking with a strict COVID-19 containment strategy nearly three years into the pandemic, potentially disappointing investors hoping for a quick reopening, although authorities are making ongoing if modest tweaks to managing the virus.
Numerous analysts and experts say China is unlikely to begin significant easing of its outlier zero-COVID approach, which is squeezing the economy and fuelling widespread frustration, before an annual parliamentary session in March – at the earliest.
Authorities are making changes such as more precisely targeting lockdowns, rolling out new vaccines and adding international flights. But they have not taken steps, like a big new vaccination push or preparing the public for the possibility of a surge in infections, that would enable significant easing of restrictions.
Chinese stocks surged 5.3% last week, the biggest weekly gain in more than two years, as investors pumped a trillion dollars into the market on hopes of a reopening in the world’s second-biggest economy.
But on Saturday, Chinese health officials reiterated their commitment to a “dynamic-clearing” approach that one described as “completely correct, as well as the most economical and effective”.
Daily infections, though extremely low by international standards, are hitting six-month highs, while officials repeatedly reaffirm the zero-COVID policy that President Xi Jinping argues saves lives. China has not reported a COVID death since May 26.
China’s reopening challenge remains managing the potential impact of rampant spread of coronavirus, even of milder variants, among its 1.4 billion people, including hundreds of millions of elderly, with little natural immunity.
Julian Evans-Pritchard, senior China economist at Capital Economics, said a move away from zero-COVID is unlikely even in 2023, citing among other factors relatively low elderly-vaccination rates.
“The experience of Hong Kong highlights the risk of reopening prematurely,” he wrote in a Friday note, pointing to that city’s extremely high COVID death rate.
“A similar outcome on the mainland would damage Xi Jinping personally: he has claimed credit for keeping deaths in China much lower than in the rest of the world,” he said. “The lack of official action to address this vulnerability suggests there is little urgency to shift course.”
TARGETED LOCAL APPROACH
A focus of the evolving COVID battle is at the local level, where authorities are eager to avoid total lockdowns like the one that paralysed Shanghai, China’s financial capital and most populous city, for two months this year.
People in many cities, including Beijing, are subject to frequent testing and face the constant risk of being deemed a “contact” of a case or having their mobile phone health app turn “abnormal” – forcing them to remain at home.
Localised lockdowns are common, and domestic travel is down sharply from a year ago.
Health officials on Saturday criticised some regions for “one-size-fits-all” lockdowns, vowing efforts to fix such shortcomings.
“There seems to be a growing tendency at the local level to emphasise a more targeted approach in implementing zero COVID,” Yanzhong Huang, a global health specialist at the Council on Foreign Relations, said on Friday.
Still, Huang does not expect fundamental change in China’s COVID policy anytime soon. “This policy pivot will not happen overnight. And if it does happen, it will be incremental,” he told Reuters from New York.
GLIMMERS OF PROGRESS
Around the edges there have been other adjustments, some of which investors have seized on as grounds for optimism.
An article in the ruling Communist Party’s official People’s Daily last week, partly headlined “Experts say COVID for most people is short term, symptoms are light,” sparked social media buzz for downplaying the disease’s severity.
The city of Zhengzhou also downplayed the dangers of COVID, after a lockdown at a vast Foxconn plant that assembles Apple iPhones led numerous workers to climb fences to flee being locked in or catching the virus.
“COVID is not scary, it is preventable and treatable,” the city’s health authority told residents.
China recently began rolling out what is believed to be the world’s first inhalable COVID vaccine, which could help in reducing vaccine hesitancy that is especially widespread among older Chinese.
On Friday, German Chancellor Olaf Scholz – on the first post-COVID visit to China by a G7 leader – announced an agreement to let expatriates in China use the vaccine from Germany’s BioNTech and pressed for Beijing to allow the shot to be made freely available to Chinese citizens.
China had yet to approve any foreign COVID vaccines.
International flights are rising: daily international flights last month on Chinese airlines rose 21.9% from September on average, according to Variflight. Still, international capacity is at just 7.3% of 2019 levels, based on data from CAPA and OAG.
China may soon shorten COVID quarantine requirements for inbound travellers from 10 days to seven or eight days, people familiar with the matter told Reuters on Friday.
Bloomberg News said China was working on scrapping a system that penalises airlines for bringing in COVID-positive passengers, citing people familiar with the matter, saying the effort was a sign authorities were looking for ways to ease the impact of its COVID policies.
Neither move would be a game changer.
“The government still believes they are doing a good job of balancing economic development and COVID control,” said Huang at the Council on Foreign Relations.
(Reporting by Tony Munroe; Additional reporting by Martin Quin Pollard; Editing by William Mallard)
